Hydro OneManagement of Electricity Transmission and Distribution - PowerPoint PPT Presentation

Value-for-money audit of: Hydro One—Management of Electricity Transmission and Distribution Assets 2015 Annual Report, Section 3.06

Background  Provincially owned Hydro One Inc. has a mandate to be a safe, reliable, and cost-effective transmitter and distributor of electricity  Hydro One operates one of North America’s largest transmission systems, with 29,000 km of high-voltage lines and 299 transformer stations  It also serves 1.4 million residential and industrial customers through it 123,000-km low-voltage distribution system 2 Office of the Auditor General of Ontario/2015 Annual Report/3.06 Hydro One—Management of Electricity Transmission and Distribution Assets

Audit Objective  Assess whether Hydro One had adequate systems and procedures in place to manage and maintain its transmission and distribution assets efficiently and cost-effectively in accordance with relevant Hydro One policies and regulatory requirements, and to ensure the system was reliable. 3 Office of the Auditor General of Ontario/2015 Annual Report/3.06 Hydro One—Management of Electricity Transmission and Distribution Assets

Overall Conclusions  Hydro’s transmission reliability worsened from 2010 to 2014, with costs rising as outages lasted 30% longer and occurred 24% more frequently  Distribution reliability consistently ranked among worst of large Canadian electricity distributors between 2010 and 2014  No benchmarks used to assess cost effectiveness of capital projects, and all approved projects included large allowances for contingencies and price escalation 4 Office of the Auditor General of Ontario/2015 Annual Report/3.06 Hydro One—Management of Electricity Transmission and Distribution Assets

Specific Findings  Backlog of preventive maintenance work orders increased by 47%, causing equipment failures  Hydro One replaced only four of 18 transformers identified in its 2013/14 rate application as being in very poor condition  8% to 26% of key transmission assets are beyond their expected service life but still in use  Vegetation trimming cycle was 9.5 years, compared to industry average of 3.8 years, making fallen tree limbs the top cause of outages to its distribution customers 5 Office of the Auditor General of Ontario/2015 Annual Report/3.06 Hydro One—Management of Electricity Transmission and Distribution Assets

Recommendations  Set multi-year targets and timetables for reducing frequency and duration of power outages  Establish timetable to eliminate growing preventive-maintenance backlog  Ensure asset replacement program targets assets at highest risk of failure  Provide accurate information on asset replacement activities to Ontario Energy Board  Shorten current vegetation management cycle from 9.5 years to less than four years 6 Office of the Auditor General of Ontario/2015 Annual Report/3.06 Hydro One—Management of Electricity Transmission and Distribution Assets

Explore Our Website  Read the full audit report  See our 2015 Annual Report and news releases  Find out about our Office  Send us feedback 7 Office of the Auditor General of Ontario/2015 Annual Report/3.06 Hydro One—Management of Electricity Transmission and Distribution Assets